Lessons from Hurricane Katrina for the COVID-19 Recovery to Come

Most people in the midst of a disaster can barely see beyond today, let alone tomorrow. Then there are those like Jimmy Reiss—rich, white, well-connected, cunning—who see an opportunity and have the means to capitalize on everyone else’s misfortune.

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In the summer of 2005, water still covered most of New Orleans a few days after Hurricane Katrina hit, and a helicopter Reiss had chartered landed on a patch of dry land in the city’s Audubon Park. Out stepped the black-clad Israeli commandos whom Reiss hired to protect his home and those of his neighbors. Then Reiss began working the phone. In the midst of the worst urban disaster in modern U.S. history, Reiss, who was chairperson of the Business Council, a group that represented many of the city’s CEOs, wasn’t secretive about his plans for a city where two-thirds of the population was Black.

The city would be rebuilt in “a completely different way: demographically, geographically, and politically,” Reiss told the Wall Street Journal ten days after Katrina. “I’m not just speaking for myself here.”

Five years later, the city elected its first white mayor in 32 years. The Black majority on the City Council flipped to a 5-2 white supermajority. For the first time in years the district attorney was white, and its police chief and white-majority boards ran the housing authority and most of the city’s schools. Ten years after Katrina, 100,000 fewer African Americans lived in a city that had 455,000 residents prior to the storm. Recent census estimates show the city’s population shrunk by nearly 1,000 people between 2016 and 2018, fulfilling the white elite’s post-Katrina dream of a smaller, richer New Orleans.

‘‘The perception among most African Americans,’’ said Lance Hill, founder and former director of Tulane University’s Southern Institute for Education and Research, ‘‘is that they are living politically as a defeated group in their own city.’’

A similar upheaval could follow COVID-19. And more than a few New Orleanians have braced themselves in recent days if for no other reason than they’ve been here before.

While most of those escaping flooded New Orleans were hunkered down and in survival mode, well-funded interests sought to exploit the situation—just as today there are already signs that monied interests are working to exploit disaster. There are other echoes of Katrina in what’s happening today. The government turned a blind eye to profiteering—a great worry now, especially after President Trump declared, “I’ll be the oversight.” And elected officials promised aid in the weeks after the disaster that amounted to little in the months that followed.

The typical New Orleanian was perched far from home for months after Katrina, if not for years. But dislocation aside, most inhabited that same stressed-out netherworld that many of us find ourselves in now: frozen in time, uncertain, and worried about the future. More than 110,000 homes and 20,000 businesses had been flooded, along with most of the city’s schools. Police and fire stations were destroyed, along with the electrical grid and the public transportation system, and incarcerated people were left to drown and without food and water at the Orleans Parish Prison, a facility with conditions later described by the Department of Justice as “dangerous and unacceptable for far too long.”

If Katrina is any guide, crucial aid from the government may be delayed—or inadequate. The aid that was supposed to arrive within weeks often took months, if not years. Applications and thick files were submitted and needed to be resubmitted because beleaguered administrators lost them. The trailers that offered a critical place to live while people rebuilt their shattered lives arrived months after they were promised, and then some had formaldehyde that made people sick. In our current crisis, the first line of relief will come from the IRS. But its handling of coronavirus relief payments—Americans who do not have direct deposit on file with the agency might not get checks for months—is not an encouraging sign.

Small businesses in New Orleans fared no better. As a reporter covering Katrina and its aftermath, I called the U.S. Small Business Administration for a comment on a story that was running over the next few days. Seven weeks later, my cell phone rang: a spokesperson for the SBA was calling back. That was a single, modest-sized city and not an entire country of small businesses. This time around, regardless of whether it has the capacity, the SBA will need to process the hundreds of billions of dollars set aside to help small businesses as part of the initial coronavirus recovery package. The agency has already acknowledged it wasn’t ready for the flood of applications, and Bank of America said Friday it received 85,000 requests for $22.2 billion in loans as part of the SBA’s Paycheck Protection Program. Such payments are eagerly awaited in COVID-19 stricken Louisiana.

In the coming months, states and municipalities will be starved for cash, and the federal government will face staggering new levels of debt. Although the federal government can run deficits, the states cannot, so there will be few resources to help the poor and working poor. And of course in an environment where governments will need to make cuts, the safety net, already tattered from years of past cuts, is at risk.

New Orleans was once home to the country’s second oldest public hospital, Charity Hospital, founded in 1736, the same year as Bellevue in New York. Before Katrina, it was a lifeline for the city’s uninsured. Working with the military just after the storm, hospital staff scrubbed clean the first three floors of the 20-story hospital and prepared to reopen it. Yet medical staff was thwarted not by mold but the state agency overseeing Charity, which several times chased out the doctors, nurses, and other personnel, and ultimately padlocked the building. The state, which was responsible for picking up Charity’s budget, had long wanted the hospital closed, as did others who saw in Katrina an opportunity to chase out the poor. Today, Charity—after multiple unsuccessful attempts to reimagine the building as everything from apartments to a new home for city government—is a moldering eyesore on the New Orleans skyline that has never reopened since those first weeks after Katrina.

As the city stares down a higher per-capita death rate from the coronavirus than New York City, the closing of Charity looms large. New Orleans could desperately use a public hospital and its nearly 2,700 beds.

After Katrina, public housing was another flashpoint where a ragtag group of first responders and activists didn’t stand a chance against the monied interests aligned against them. Reopening public housing as fast as possible seemed critical in a city desperate to reignite its economy. Yet those who had long sought to rid the city of public housing stood in the way. Two of the city’s four largest housing projects (locally known as the Big Four) escaped Katrina with little damage. In 2007, the City Council voted to demolish public housing while outside the chambers people protesting the decision were pepper sprayed and shot with stun guns by New Orleans police. One of the larger projects was the Iberville on the edge of the French Quarter, which housed a share of the area’s service workers. Most of the Iberville was torn down in 2013 and the entire complex was converted to a mixed-income complex that recently opened. Even before the teardowns were official, a local Republican representative boasted, “We finally cleaned up public housing in New Orleans. We couldn’t do it but God did.”

Similarly, the storm became an excuse for a takeover of the schools. The New Orleans school system is now composed almost entirely of charters—many of which perform poorly—and only recently have most schools been returned to local control.

Although it’s too early to say how this type of political opportunism will emerge after the COVID-19 pandemic, those seeking broad changes to how society functions are no doubt ready to pounce. Unless organized opposition emerges, it will be difficult for those with less power to stop them.

If Katrina is any guide, profiteering amid the current COVID-19 pandemic seems inevitable given the hundreds of billions of dollars that will be sloshing through the hands of businesses and officials. Within 10 days of Katrina, Congress approved $62 billion in emergency relief for the Gulf Coast. That pales in comparison to the $2 trillion coronavirus stimulus package already passed, including a $500 billion corporate bailout fund. Yet corporate profiteering still reached epic proportions in New Orleans and the region after Katrina.

FEMA—the Federal Emergency Management Agency—paid $23 per cubic yard to haul away the waste caused by the collapse of the levee system and the resulting flooding. But congressional investigators figured out that bigger companies were using five layers of subcontractors, with the people actually doing the work paid $3 per cubic yard.

The profiteering by those the government paid to protect storm-damaged roofs in the area was even more dramatic. The blue tarps that were a “godsend” for many of the thousands of homeowners who had damaged roofs after Katrina, according to Knight Ridder, were also a windfall for the participating companies. The government paid out an average of $2,480 per job, though Knight Ridder found that it took less than two hours of work to cover each roof and the government provided the blue sheeting at no cost. “Highway robbery,” the vice president of Taxpayers for Common Sense told Knight Ridder, noting that he had recently paid $3,500 for a brand new roof.

A different kind of profiteering took place among insurance companies, who, it was widely believed, would be hit hard after Katrina by the cost of making all those homeowners and businesses whole. Spokespeople for the insurance companies stressed the huge cost to its carriers, which were looking at a record-setting $41 billion in insured losses after Katrina. Also a record: the $45 billion in profits that insurance firms collectively pocketed in 2006. This time around it is likely to be health insurers, not home insurers, looking for compensation for their sudden hit.

The final $2.2 trillion coronavirus deal creates an oversight panel and deputizes inspector generals as protections against fraud, but Trump undermined those provisions on the same day he signed the bill into law. In a signing statement, the president claimed there were “several provisions that raise constitutional concerns” and that he would not be bound by a requirement that those inside the executive branch report to Congress “without delay.” His administration, Trump said, “will continue the practice of treating provisions like these as advisory and non-binding.” Wrote New York Times columnist Farhad Manjoo in a tweet: “You’re absolutely dreaming if you think a nasty inspector general report… is gonna stop Donald Trump from misusing this $500 billion loan program.” One little noticed provision of the final deal is a small change in tax policy that “could hand $170 billion in tax savings to real estate tycoons,” the Times reported.

Finally, Katrina underscores what most of us already know: Leadership matters. Like Trump, Ray Nagin, the mayor of New Orleans at the time of the hurricane, was a political neophyte who came to government from the private sector. When he was elected a few years before Katrina, he’d served as CEO of a local cable company. Nagin was re-elected while the city was still reeling six months after Katrina, and he promised to guide New Orleans through an “incredible rebuild cycle.” But Nagin proved to be a corrupt and ineffective leader and New Orleans basically lost four years of the post-storm recovery until the end of his term in 2010. He is currently serving a 10-year sentence in federal prison, after being convicted in U.S. District Court in 2014 on charges including wire fraud, money laundering and bribery.

Louisiana’s governor, Kathleen Blanco, also fell short. The federal government, under Republican control, had created the largest housing recovery program in U.S. history. Known as Road Home, it was intended to supplement the amount of money people received from their insurance companies. But Blanco’s office decided that Road Home funding should be capped at the appraised value of a home rather than the cost of rebuilding, even though a home in a white community was typically appraised at a far higher price than the same house in a Black community. The policy thwarted the efforts of African American homeowners seeking to rebuild.

Black homeowners sued and, five years after the storm, a federal judge upheld their claim of racial discrimination. But by then officials had already spent more than 98 percent of the $10.5 billion that the federal government had committed to Road Home.

Disasters are supposed to be a time when people pull together. Yet as Katrina and other disasters demonstrate, the recovery is often a different story altogether. The recovery in New Orleans disproportionately harmed those on the bottom half of the economic ladder and ripped apart the social fabric of the community. It’s as the Berkshire Hathaway CEO Warren Buffett said around one year after Katrina: “There’s class warfare, all right, but it’s my class, the rich class, that’s making war, and we’re winning.”

Gary Rivlin, who covered Hurricane Katrina and its aftermath as a reporter for the New York Times, is the author of six books, including “Katrina: After the Storm,” released in 2015.